Oireachtas Joint and Select Committees
Tuesday, 16 June 2015
Joint Oireachtas Committee on Agriculture, Food and the Marine
Beef Data and Genomics Programme: Discussion
I remind members, witnesses and those in the Gallery to turn off their phones. I welcome, from the Department of Agriculture, Food and the Marine, Mr. Brendan Gleeson, assistant secretary, Mr. Gordon Conroy, principal officer, Mr. Colm Hayes, principal officer, Mr. Fintan O'Brien, principal officer, and Mr. J. P. Mulherin, assistant principal, and thank them for coming before the committee today to brief it on developments regarding the beef data and genomics programme.
Before we begin, I bring to your attention that witnesses are protected by absolute privilege in respect of the evidence you are give to the committee. However, if you are directed by the committee to cease giving evidence on a particular matter and you continue to so do, you are entitled thereafter only to a qualified privilege in respect of your evidence. You are directed that only evidence connected with the subject matter of these proceedings is to be given and you are asked to respect the parliamentary practice to the effect that, where possible, you should not criticise or make charges against any persons or entity by name or in such a way as to make him, her or it identifiable. Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the House or an official either by name or in such a way as to make him or her identifiable.
Mr. Brendan Gleeson:
I thank the Chairman and committee members for providing me with the opportunity to update them on developments regarding the beef data and genomics programme, which was launched by the Minister for Agriculture, Food and the Marine, Deputy Simon Coveney, on 5 May 2015. It is part of Ireland’s Rural Development Programme 2014-2020, and it involves funding of some €300 million over the next six years, and builds on the State’s investment in data recording and genomics in recent years. It will address widely acknowledged weaknesses in the maternal genetics of the Irish suckler herd, make a positive contribution to farmer profitability and reduce the greenhouse gas intensity of Ireland’s beef production.
Beef accounts for 35% of the gross output of the agriculture sector. It is arguably the most important primary agricultural product in Ireland at farm level. Beef exports in 2014 amounted to 524,000 tonnes, worth €2.27 billion. Ireland exports 90% of its beef. We are the largest net exporter of beef in the EU and the fifth largest in the world. In addition to beef exports, Ireland also has a strong live export trade to Europe and beyond, with more than 236,000 live animals exported in 2014 at a value of over €172 million.
The suckler herd is a critical component of the industry. It is beef from the suckler herd that has principally enabled us to succeed on international retail markets. It is important, therefore, that policy at EU and national level recognises the challenges and opportunities facing suckler beef farmers and provides the infrastructure to help it to respond and thrive in this environment. There is a clear profitability challenge on suckler farms, which is not a new phenomenon. The 2014 Teagasc national farm survey showed that cattle-rearing farms had an average family farm income of just over €10,000 and that for many suckler farmers the income received from direct payments exceeded the income they received from the market.
In addition, the impact of livestock production has become a critical part of the international debate on climate change. While the production of beef in Ireland has a low carbon footprint relative to some competitors, in Ireland the agriculture sector accounts for a high percentage of our overall emissions. Positioning Ireland in the international marketplace as a producer of high-quality, environmentally sustainable beef through initiatives such as Origin Green has been a central part of Bord Bia’s marketing and promotion strategy on international markets.
In its October 2014 conclusions on the EU’s Climate and Energy Framework to 2030, the European Council recognised the need to meet rising global demand for food in a way that is environmentally sustainable, and committed the Commission to examining how to encourage the sustainable intensification of food production.
Improving the genetics of the suckler herd can make a positive contribution in all of these areas. Research from Teagasc and the Irish Cattle Breeding Federation, ICBF, shows that the suckler herd faces significant breeding challenges at present. The sector has been successful in breeding animals for terminal-type traits such as carcass weight and carcass conformation in response to market demand for high-output beef animals. However, there has been less concentration on maternal efficiency traits such as fertility and milk yield, which are equally important for producing good weanlings and improving profitability.
On average, Irish beef farmers produce only eight calves for every ten suckler cows, and this trend has not been improving. The interval between calving has been expanding and is now well in excess of 400 days, at 419 days. This is going in the wrong direction and the reality on the ground is well beyond the target of one calf per cow every 365 days. There are similar concerns in relation to other measures such as the age at first calving and weight of calves at weaning.
The beef data and genomics programme, BDGP, is a response to these challenges. It provides targeted support to suckler farmers. It builds on the success of the State’s investment of €9 million in the beef data programme in each of 2013 and 2014, and on the success of the pilot beef genomics scheme, which involved investment of around €23 million last year. The BDGP will enhance our knowledge and understanding of the national herd through increased data collection and genotyping. Farmers can utilise this information to retain the best types of animal as replacement heifers for breeding. The rationale for the scheme is based on the relationship between carbon and economic efficiency at farm level. It is critical that there is a synergy between carbon efficiency and economic efficiency. By producing animals more efficiently in terms of fertility levels and milk yields, the beef sector can benefit on the double - first, through an improvement in profitability for farmers from producing weanlings or finished animals, and second, through a reduction in the amount of greenhouse gases emitted in the production of these animals per kilo of beef.
The BDGP is the first measure of its kind anywhere in the EU. It has been approved by the European Commission under Article 28 of the Rural Development Regulation, which deals with agri-environment measures. Programmes approved under this article are required to comply with certain requirements. The first is that payments are based on the cost incurred and income foregone in carrying out the programme. This is a principle which applies to rural development schemes generally. Any modification or deletion of actions in the programme would of course result in a corresponding reduction in payments. Second, commitments must, under the regulation, be for a period of five to seven years. The BDGP requires a six-year commitment by the scheme applicant and this is matched by a corresponding commitment from Government to provide a stable and guaranteed payment to applicants over that six-year period. Some concerns have been expressed regarding this six-year commitment and, as a result, the Minister for Agriculture, Food and the Marine, Deputy Coveney, has signalled a number of flexibilities regarding exit during the six-year programme. I am happy to go into these in more detail later if the committee wishes. All agri-environment measures are required to be paid on a per-hectare basis.
Participants in the BDGP will receive a payment of €142.50 for the first 6.66 hectares and €120 for each hectare thereafter, up to a maximum payable hectarage. This is equivalent to approximately €95 for the first ten calved cows and €80 for each additional calved cow. Participants will also receive an additional €166 to attend a training course linked to the programme. The maximum payable hectarage is calculated by dividing the number of calved cows in the herd in 2014 - the reference amount - by a standard stocking rate of 1.5 calved cows per hectare. On the basis of this stocking rate, the vast majority of farmers have far more land than they require to obtain the maximum payment under the scheme. Almost half of farmers have a stocking rate of 0.5 or less and 90% have a stocking rate of less than one. An example is that a farmer with ten cows and a stocking rate of 0.5 will have 20 hectares, but will require less than seven of these to attract the full payment under the scheme.
In return for this payment, which is calculated on a cost-incurred and income-foregone basis, the participant will be required to undertake six actions, many of which are already known to and well understood by participants in last year’s beef data and genomics schemes. The first requirement is to provide calving details. Participants must complete a calving ease survey for each calf born on the farm using what is known as the animals events sheet. This is in addition to normal tagging and registration requirements and can be completed online or through the animal events book provided by the ICBF.
Farmers are familiar with this requirement, which is exactly the same as that under the beef data programme during the past two years.
The second action involves the completion and submission of survey forms for the cows, calves and stock bulls on a farm. The data submitted will relate to criteria such as milking ability, docility, calf size and calf vigour. This is vital information for the database behind the breeding indexes, which are developed by the ICBF, and will strengthen the robustness of breeding advice provided to farmers. Again, this requirement is the same as that which applied to farmers who were involved in the beef data programme in recent years, albeit with some additional information now required.
The third requirement relates to the genotyping of animals on farms. This requirement was the central component of the pilot beef genomics scheme last year. The only difference under the BDGP will be the increase in the percentage of animals to be genotyped. However, this will be matched by an increase in payment. As with last year’s scheme, the proportion of the payment to the farmer absorbed by genotyping costs is expected to be approximately 15%. The position will, therefore, be much the same as last year. The ICBF will select animals to be genotyped in each herd and will notify the owners of the animals selected. Tissue tags will be supplied to the participants for this purpose. The selection of animals will be based on a genotyping plan developed by the ICBF. The number of animals to be genotyped each year will be equal to 60% of the number of calved suckler cows that the applicant had on his or her holding in 2014, that is, the applicant’s reference animals to which I referred earlier. For example, an applicant with 15 reference animals in 2014 must have sufficient animals to genotype nine animals in each year of the programme, without repetition. This increased level of genotyping improves the reliability of the breeding indexes and, importantly, ensures the identification of sufficient numbers of four- and five-star females required by BDGP herds.
The replacement strategy relates to both the stock bull and the female replacements introduced into herds during the six-year programme. In order to achieve the objectives of improving the genetic merit of the national herd and lowering the intensity of greenhouse gas emissions, it is vital that we not only identify the appropriate animals, but that we also incentivise their use in farmers' breeding strategies. This requirement, however, will be phased in over time. The requirement for farmers using stock bulls is that at least one of the bulls on the holding on 30 June 2019 must be a genotyped four- or five-star animal on either the terminal or replacement index. Where it is replaced in the following 12 months, it must be replaced by a bull of equivalent genetic merit. For those using artificial insemination, AI, at least 80% of that used must be from four- or five-star bulls on either the terminal or replacement index from 30 June 2016. Farmers renting bulls for breeding must, from 30 June 2016, use bulls that are four- or five-star on the terminal or replacement index, either within or across breed. Such farmers must, of course, inform the Department of their intention to use a rented bull and should ensure compliance with animal health and movement legislation, including a requirement for a pre-movement test for TB and bovine viral diarrhoea, BVD.
The requirement for female replacements is that, by the end of the scheme, the number of four- and five-star cows on a participating herds must be at least equal to 50% of the number of reference animals advised to the farmer at the start of the programme. For example, a farmer with 20 calved suckler cows in 2014 must have ten four- or five-star females by 31 October 2020. These animals must be at least 16 months old, to ensure they are being retained on farms, and must be four or five stars on the replacement index at the time of purchase, for heifers brought into the herd, or at the time of genotyping, for those replacements bred within the herd. There is also an intermediate target of 20% for 2018. A considerable amount of analysis has been undertaken to ascertain the availability of these female replacements in the coming years. Many farmers are already well on the way to meeting the requirement for four- and five-star animals. Analysis undertaken by ICBF of the 2014 beef genomics scheme has indicated that some 30% of herds are already compliant with the requirement for female animals in 2020, that is, that the number of four- and five-star heifers is equal to 50% of the reference animals on each farm. All farmers will receive comprehensive training, and ongoing information and advice to assist them in introducing the required breeding strategy. Of course, these requirements will take time to introduce and this is why a five-year lead-in time has been included in the design of the programme.
The fifth element is the carbon navigator, which is an online farm management package produced by Bord Bia and Teagasc. It quantifies the environmental gains that can be made on each applicant's farm by setting targets in key areas. It is a very useful and simple tool which allows individual farmers to look at changes which can be made on their farms, in areas such as the length of the grazing season or their average calving rate, and illustrates what that change would mean in terms of reduced greenhouse gas emissions from his or her herd and the increased profitability associated with such a change. The first completion of the carbon navigator must be undertaken in conjunction with an approved adviser, the cost of which will be covered separately under the rural development programme, RDP.
Participants must also submit data annually to allow for an update of the carbon navigator.
The final element of the programme is the training course to be delivered over the next 16 months or so. To deliver on the objectives of the BDGP and to work with each individual farmer to identify their breeding needs, it is vital that the participants receive dedicated training and advice. The four-hour training course will cover the individual requirements of the scheme; the importance of data collection and maternal breeding traits; the optimal use of breeding indexes; and the linkage between breeding and carbon efficiency at farm and national level. The cost of the training will be covered separately under the RDP and farmers will receive €166 to cover their costs of participation. Again, that will not cost the farmer anything.
The BDGP involves an investment of €300 million in addressing some of the key challenges facing the beef sector in Ireland. Some 30,000 farmers have applied for the scheme at this point and the programme is likely to be fully subscribed. I thank members for their time and patience, and I would be happy to provide any further detail of clarification they deem useful. If they need information that I do not have with me, I am happy to come back anytime.
I thank the officials for attending. To say that was a quick tour of the genomics scheme would be an understatement. There is major concern about this. The first thing we must remember is there are 73,400 herd owners in the country and we must look at the profile of these people. The booklet associated with the scheme is enough to put off many people from joining it because they will say to themselves: "I will get clobbered in years five and six and the money I do not get, I do not miss, but the money I get that is clawed back I will miss when the claw-back happens." It is interesting that across the country there is a distinct impression that somebody has dreamt up this scheme in some laboratory of bureaucracy and science with no reference to the reality of the ordinary farmer and he or she is not willing even to listen to the concerns.
The first concern I have heard about relates to the claw-back and the penalty. The main concern about the penalty relates to not achieving the four star and five star status as required. I acknowledge the Minister's reassurances about force majeureand so on. Any confidence people would have had in the common sense of the Department and the European Union in respect of penalties went out the window with the LPIS review in 2013. There is a lack of confidence in the Department not to approach participants in five or six years' time under a different Minister and using different officials to say: "Sorry, these are the rules. Did you read your little booklet and in paragraph 52A(d) it says such and such? Sorry, a penalty will be imposed." That is what farmers are afraid of. The claw-back and penalty is a major issue.
I am not an expert in this but I welcome my colleague, Deputy Aylward, to the committee. He is an experienced farmer and he will be able to elaborate on a second issue that has been raised with me. I am told that in certain herds, the 60% requirement will mean one will run out of cattle to genotype unless one starts genotyping male cattle.
The third issue relates to the four- star and five-star status. Ideally, I would have liked representatives of the ICBF to have come before the committee to give members the A to Z of star ratings and to tell us exactly how they arrive at a star rating because I have heard more combinations and permutations about such ratings over the past three or four weeks to last me a lifetime. However, the pedigree breeders seem to have issues and Deputy Aylward will the deal with the technicalities such as lack of bulls and so on. There is a great worry when talking about maternal rates, lactation and milk production that what the Department will rate as a highly suitable animal will not suit hills and marginal land.
It would be like using a very productive lowland ewe and saying this produces a lot more lambs than any hill ewe and therefore we will put it up on the mountain. What will happen is that she will never come down again.
A fourth issue raised with me is one of these quirky little ones. Complying with this with regard to bulls out on islands becomes a particular challenge where they have their own ways of dealing with these issues. It is not that easy to bring bulls over and back to islands, and on islands, by definition, AI does not work. It is not a possibility because by the time the AI person is brought out, the cow would no longer be in heat. There is also the problem that a lot of farmers are part-time farmers and, again, AI is not how it is done.
I am very grateful to the Department for providing me with some figures. As I said, there are 73,640 herd owners in the country. The number of applications show, as one would expect, that the small herd owners have said, "Thanks, but no thanks; you can keep your scheme". Some 54% of the herd owners, which is more than half and is a majority in a referendum, have fewer than ten suckler cows. Only 22% of those have even sent in the form. I know they do not come to the Department and it does not affect the figures that much as to the number of animals in the scheme, but obviously the majority of herd owners are small herd owners and they have said, "Thanks, but no thanks." When we move to ten to 20 cows, 53% have applied and when we go to the higher deciles, the average is around 70%. To remember Pillar 2, the Minister said time and again that he would look after the marginal areas, the small farmers. Once again, the scheme is designed to be totally unattractive to the small operator.
This scheme needs to be radically reformed. I suggest that what we should do is see if the science really works in practice on the ground for six years. In an ideal world, what would make the scheme at least operable would be to reduce the genomic testing to 30% instead of 60%. The Department should say that genome information is provided to the farmer for the first six years but that it would be left to the farmer to decide how to use that information rather than the Department being prescriptive. As I said, there are serious reservations as to whether this will necessarily give them the one that suits the particular lands in question or the pedigrees and so on. If it is as profitable and produces much more profitable and greater calving numbers, the farmers will cotton on fairly fast and they will follow. However, it may not be as simple as the Department is making out - this is new science and it is very different from the dairy herd where one is talking about big herds, small numbers and professional farmers. If there are flaws in this, we will not have driven everybody into a very confined market where the price of certain type of cattle will be driven right through the ceiling. We will not have driven them into a crazy situation.
Finally, I have a question. A farmer rang me today and said that he had been in contact with the Department and it had informed him that if he did not withdraw from the scheme, as this farmer intended doing, before the ICBF pack issued if he then, having seen this information sheet, baulked at it at that stage because it was too bureaucratic and involved too much paperwork, too much risk or whatever he would be billed for the pack.
Is this correct? When will the packs issue to farmers? What is the cost of the pack as issued to farmers? To be quite honest, if that is true, the Department should write to all farmers within the week informing them that if they do not get out before the packs issue, they will end up paying money for having sent in a form to the Department for a scheme about which they have second thoughts. My belief is that a lot of farmers, big and small, have sent in the form hoping that the Minister would make radical changes to the scheme in view of the massive meetings that have been held in every corner of the country. It is my belief that as the Minister has made no change to the scheme and has not listened to anybody with regard to it, there will be a massive withdrawal from the scheme among all farmers but particularly among the farmers with fewer than ten suckler cows because, to put simple figures on it, when one takes out the direct cost of paying for the genotyping, a farmer with fewer than ten cattle, with six or seven cattle, will get only a few hundred euro for all his or her trouble. I think a lot of farmers will decide the risk is not worth the benefit because in five or six years' time, somebody can just ring up and say, "Sorry, we want the money back."
It is also written in this that when the inspector comes out to inspect for this scheme, part of the deal will be to do a whole farm inspection, but farmers are very reluctant these days for €300 or €400 to have any unnecessary whole farm inspections drawn on to them.
I thank Mr. Gleeson for his presentation. I concur with almost everything Deputy Ó Cuív has said. There is awful confusion with regard to this scheme. There is fear, in particular with regard to the clawback. If someone takes up the scheme and midway through it, for financial reasons, is no longer able to continue with it, there is a claw back and this could happen after four or five years. For example, if a farmer falls ill and is unable to continue for the six-year period, there is an understanding that this money will be clawed back. This is creating a lot of fear and I ask Mr. Gleeson to clarify the situation in his response.
The other issue is that a farmer must be at 60% by the third or fourth year, that 60% of the animals must be tested. The cost of those tests is around €30 a head which would work out at an average cost of €18 for an average sized herd. I understand that is at a loss to the applicant.
I refer to the four- to five-star genotype which must be realised by June 2019, as stated in Mr. Gleeson's presentation. If this is not realised, it is clawed back. In effect, it does not augur well. Deputy Ó Cuív said that a lot of people will pull out of the scheme and will not go ahead with it. What is the level of funding allocated for the scheme? If the full amount is not taken up, where does the surplus go? Mr. Gleeson stated that €166 is allocated for training purposes and that it can be done in four hours for those with an average second level education.
Many of the older farmers, and I mean no disrespect, who live in isolated rural areas might not have that opportunity. That needs to be considered. Many people would prefer to know exactly what they are getting into. There is a lot of confusion, not least among many Oireachtas Members. Before recommending the scheme to anybody, I would like to know exactly what it entails and the consequences for the farmers and so forth.
How does the reliability of four- and five-star artificial insemination, AI, bulls figure after the tests? Will the farmer be the victim if the expectation is not met?
It is vital to ensure that the genetic background of our herd continues to improve to allow us to penetrate and achieve a greater share of the market. The market is much more profitable now. Two decades ago, fewer than two out of every five of our animals were capable of doing so because of our genetic and breeding background. In my area, the midlands, suckler cows are significant and we are significant beef producers. This scheme is very important and I will have no truck with anybody advocating that people do not apply by the closing date. I certainly advocate very strongly that they apply and then make up their own minds. I would not encourage people to withdraw from the scheme. I hope there will be amendments and changes that will make it more meaningful and allow people to continue to participate in it.
People always preface their remarks with the phrase “it is my understanding”. That is the problem with the scheme. The phrase means there is less certainty and a lack of clarity. That was the bane of the scheme in its infancy. The way the information was presented was less than helpful, to put it charitably. The emphasis on claw-back was a major error. Putting red lines up straightaway strikes fear and terror into people, particularly given that the strength and depth of the force majeurecircumstances were not set out comprehensively and illustrated, as they should have been. I agree with Deputy Ó Cuív about the experience of looking back and clawing back from people when they were given payments under the circumstances that prevailed at the time. Now people are suffering because of high resolution digitisation of cameras. That is less likely to happen in this area. That is the rationale for people’s fears. The Department must understand why people are fearful and address those fears in a comprehensive and focused way while dealing with the issues.
How will farmers maintain the number of animals to fulfil and achieve the four and five star status requests specified for the BDGP herds? What guarantee can one give to ensure that the genotyping costs will be restricted to 50% of the total payments to farmers? Why is the number of animals for genotyping being significantly increased when compared with the numbers in the Irish Cattle Breeding Federation, ICBF, trials in 2014? One would anticipate an increase but the volume, level or nature of the increase is significant. Very often it would be better to have the training up front, rather than as the final element of the programme. I know there were time constraints but this is the problem with a scheme that is time constrained.
We are coming to the troughs late in the day and are now trying to fit it in. It is being brought in under a different heading and trying to achieve things in an area using a particular heading. We all understand that, as we should. Over the six years it will bring in well over €300 million. I hope that when those teething problems are ironed out, there will be some flexibility to give people confidence in the scheme. If the first thing we are presented with in school is a ruler instead of being welcomed and we are slapped, we will have a fear for the rest of our time there. That was a failure of communication on the corporate and political levels.
It would be foolhardy to dismiss the scheme. I see a great deal of benefit in it, particularly in the trying circumstances beef farmers are in, and it is important that they get every aid that can be given and that it is used to increase the profitability of the herd. This could be modified and appropriate flexibility built in to correlate to the individual circumstances of the farmers. Some farmers are ageing too. That has to be taken into account. Some farmers I deal with are ageing and the amount of paperwork is a negative for them. That may well be part of the issue. If the Department can get the training right and it is not laden with bureaucracy, it will be a worthwhile scheme and I would like to see it go ahead when some flexibility and appropriate amendments are made.
It is good to get this information into the public domain. The scheme has been fraught with confusion. It was introduced in rather a hurry and many people contacted us to say they were not sure whether to participate. The scheme is a good idea and down the road will prove valuable. We need to be very cautious and aware of the best way to implement it.
Mr. Gleeson mentioned the low carbon footprint throughout his document and to a great extent it is the basis of the scheme. He stated: “The agriculture sector accounts for a high percentage of our overall emissions." I hope the savings in carbon emissions will be passed on to the other sectors of agriculture, rather than to industry. Does that make sense? The number of dairy herds will increase and I hope that any benefits achieved at the expense of beef farmers will be kept in farming in general. I would like an assurance on that.
I understand the aim is to produce more beef efficiently, and Mr. Gleeson outlined other efficiencies, for example, eight calves for every ten cows, which would give a 20% efficiency. A total of 54 days out of every 365 are missing where another 14% or 15% could be picked up, giving a total of 35%. The stocking rate varies by 100%. There could be more benefit for farmers in examining their efficiencies within holdings rather than this scheme. I would be conscious of that because the profitability of most agricultural commodities is low.
Mr. Gleeson said the information on BDGP will help farmers retain their best animals but most farmers who rear sucklers professionally would know their best animals.
The benefit arises when farmers sell their animals at a mart or into the public domain, where people have a reference. It is similar to milk recording data in the case of cows in that one knows exactly what one is buying. The same principle should apply to leased land, as many people farming leased land do not have a clue about the fertility of the land they have leased.
There is a six-year commitment to this scheme. It is good to know that the Department is committed to it. Many people have contacted me about this scheme. In one case a retiring farmer wanted to reduce his herd from 60 to 30, but that would preclude him from participating in the scheme. He will continue into his older age to produce 30 fine animals at a high rate and the land he would have leased will go to a young, active farmer. Therefore, there will be a net benefit to agriculture in that case. However, under this scheme, he would be precluded from reducing his herd to that extent. I understand the threshold under the scheme is 20%, although I might be wrong on that percentage. We should examine that point, because we must realise that our farming population is elderly. Many of those farmers who have suckler herds will not commit to the workload involved in this for six years, and we should not expect them to do so. Rather, we should expect them to commit to what they can manage. Also, if these animals are being recorded under the scheme, there is no reason they cannot continue to be recorded if they are sold to somebody else. Flexibility is needed here, because behind all of this is a fear of penalties. We have seen farmers penalised for small items for which they feel hard done by. There is a lack of trust, and that is the source of the fear. If we could say that this would be dealt with in a very practical way, that would be an important factor.
There are cases in which a farmer wants to reduce his suckler herd because of profitability concerns. We had a serious incident last week, and if the profitability of Irish beef dropped substantially, it would be unfair to expect farmers to continue in production in this sector for five years, making a loss. God knows farmers are making very little as it is. Profitability is a very important factor and that aspect needs to be examined. Nobody stays in farming unless they can make a profit, and we would not expect them to do so. Those two points need to be examined.
There has been a lack of communication about this, and I am glad it has been set out in more detail here. Every farmer who is involved in this programme should get a pack setting out the detail of it and possibly more meetings on it should be held around the country.
Farmers have also expressed concern regarding the speed of genotyping to date. Can the witnesses give assurances that this will be done in a speedy and reliable fashion and that there will not be any inconsistencies in the results that come through?
It was stated that the stock must be of four-star or five-star quality. We all know that there are incidents on farms in which, for example, bullocks are not castrated properly, there are break-out episodes, or animals are put in calf and those calves will not be four-star or five-star quality. Are there methods whereby such incidents can be reported without incurring a penalty? These are the practicalities of farming. The witnesses might comment on those points.
I agree with almost everything Deputy Barry said, but I note that he said nobody stays in farming unless they are making a profit and nobody would expect them to. There are a fair few farmers in the beef sector who are not making much of a profit other than what they are getting in direct payments. Many of the processors expect them to stay in the sector, and their business model is built on that. I have attended a few meetings in Clare on this issue. Some criticism was voiced that Department officials were not going out to meet farmers, and on behalf of those farmers, I have two specific questions. People from the artificial insemination side told people at these meetings about the case of a bull that was brought into Ireland that initially was considered to be a four-star bull but that was suddenly downgraded to a two-star rating. Those in AI are specialists in this area. In every other area and every other scheme farmers have to do their utmost, and they must act in good faith.
If one declares the right amount of land, the land does not change. It is still the same acreage and bushes do not suddenly appear, although I accept there can be some doubt about what land is or is not eligible.
If the Department officials were to go out and meet the ordinary farmers they serve, how would they guarantee them that on 30 June 2019 they would have genotyped four-star and five-star bulls? What could they do to be certain that they meet that requirement and that 50% of the number of reference animals with regard to cows were four-star or five-star quality? I am talking about what they could do to be certain in this respect as opposed to acting in good faith because acting in good faith is not enough for this scheme. They either make the cut or they do not. That is my first specific question.
At both of the meetings I attended, I noted that the age profile of the participants was quite old, which is not unusual to find at farmers' meetings across Ireland. Deputy Ó Cuív said that many farmers will not be able to comply with all these technicalities. They have been farming a long time, they are heading towards retirement and they are not interested in this. That came through at those meetings and although there were a few young farmers there who were interested in this, they were new entrants. They did not have a suckler herd in 2014. They are considering moving on to another type of farming or they are taking over a farm. What would the officials say to them? How can they get involved in this scheme in a worthwhile way? I presume they are the target for this scheme in that they are the future of Irish agriculture, but such farmers seem to be penalised by the terms of this scheme. Will any moves be made to include them in the scheme?
I thank Department officials for being present and I thank Mr. Gleeson for his presentation. The launch of this scheme has created much debate across the country and members have attended a number of meetings on it. With €300 million available for farmers under this scheme, or €52 million in each year of the scheme, it should have been a very positive story. The first mistake made was the inclusion of what was written in red on the top of the application form to which many people reacted. A number of issues have arisen and I hope we will be able to get clarification on them.
The six-year period is a major problem, as has been mentioned over and over again. Would it be possible to have a rolling reference year? This issue has been raised by the farming organisations. It has been raised with members in their constituency clinics and by people they met at the meetings that have been held. Many farmers would have had difficulties in 2013 and, as a result, they would not have had their cows in calf and, therefore, calving was down in 2014. I have met farmers who had cows in their herd that would not have calved until early 2015 because of 2013 being a bad year. Those farmers could prove that the cows were in their herds right through that period. There may be some aspect to be considered in that area.A rolling reference year would work or account could be taken of herds and if cows were among herds during that period.
A review of the star ratings has been promised. I agree wholeheartedly that we must try to produce animals of a three-star, four-star or five-star rating. That is the way forward. We want to ensure the beef sector is profitable and that is the way to proceed, but we may be trying to do it too quickly. Four or five years might be too short a period to achieve it. It may take a little longer.
It is important to get the information out to farmers. The Department will be sending out a pack to farmers. Farmers would have compiled much information dating back eight or nine years on foot of various schemes in which they have participated. Considerable information would have been gathered. It would be important to let farmers know as soon as possible the status of their herds in terms of the star rating. It is vitally important to improve the herd. We have encouraged people to join the scheme. Beef has been a very low-income business. The point was made, and this was the subject of a recent article in the IrishFarmers' Journal, that if we had a better quality herd more money could be made by farmers having fewer animals. Farmers could reduce their herds and produce much better quality animals and as a result they would have more income from fewer animals. Those are a number of points on the scheme.
I thank Mr. Gleeson for his presentation. Most of the issues I wished to comment on have already been raised. We started on the wrong foot with this scheme.
People thought it was a suckler cow scheme. We must remind people that it is an environment scheme and is equivalent to schemes such as REPS, AEOS or GLAS. That is the message behind the scheme and why there is a six-year tie-in.
As Senator Comiskey stated, it is good that €300 million will be invested in beef farming, a sector that has been under pressure for a long time. The market has picked up over the past year but for the previous two years it had been a disaster.
Many Members have raised the issue of inspections and how farmers fear them. I hope the new charter will convey to participants that a beef genomics inspection will not be a full compliance inspection. That fear has turned a lot of people off the scheme.
The biggest issue is the star rating for replacement stock. Farmers have between three and five years to get this matter in order. The Department has stated here that 50% of the female stock is already compliant. Unfortunately, that may not be the case because the data stem from larger suckler farmers. A lot of new people wish to join the scheme so we may not have data on their herds. I do not know how new participants will achieve a rating of three, four or five stars in the next four or five years. The matter must be examined. A mid-term review will take place but the Department must be flexible about three, four or five star replacement aspect.
I wish to mention the rolling reference year. Last year, 2014, has been set as the reference year so the Department knows exactly how much it must pay out for the next six years. The rationale for the scheme is to produce better quality beef in a shorter space of time. I believe that people should be awarded for their efficiencies. Therefore, if people want to increase numbers by 10%, 15% or 20% flexibility should be shown. As the assistant secretary said, people can reduce their numbers as long as it is less than 20%. If people choose to reduce their numbers then other people should be allowed to increase theirs if we want to retain the same size of suckler herd. We have discussed the growth of the dairy industry on numerous occasions here. However, there is a danger that the national suckler herd will be reduced. Unless we are seen to support a viable beef suckler herd then we will not have one and, eventually, the majority of our beef will be produced from a dairy stock. The issues are the rolling reference year and providing flexibility to people so they can increase their herd size. In terms of the latter, I am not saying increase it by 100%. People are allowed to increase by a certain percentage every year and will be paid for it. Such provision will help to support and sustain our beef suckler herd.
The scheme is due to last six years. I suggest that some flexibility be shown; force majeure can come into place but there are other issues. If a business is no longer profitable then people should not be asked to stay in it. That element must be examined.
The biggest issue is worry about inspections. There is also an issue with the replacement indexes.
I thank the Senator. I do not know what is causing interference but it seems to come from his side of the room.
Deputies Aylward, Fitzmaurice, Connaughton and Naughten are not members of the committee but they wish to comment. I wish to inform everyone that we must conclude this session at 4 p.m. and vacate the room at 5 p.m. I wish to be fair to the two groups scheduled to attend for the next session and to give officials time to prepare. Therefore, I ask the Deputies to limit their contributions to three minutes which will bring us to 4.35 p.m. and thus allow 25 minutes to discuss the next topic.
The first Deputy to indicate was Deputy Aylward. I call him to commence and welcome him back to the committee.
I thank the Chairman. I welcome the officials from the Department and I am glad we have an opportunity to air our grievances.
For the past ten weeks I have travelled the highways and byways campaigning to be elected in a by-election. On my travels I met the farmers of counties Carlow and Kilkenny. Therefore, I know there is a lot of fear, distrust and a lack of communication across the board.
When I came in here today the first thing I learned was that the committee welcomes the fact that Commissioner Hogan, during his term in office, wants to prioritise the simplification of agriculture.
If that is the case then why has Europe imposed more bureaucracy on the sector through this programme? People and farmers distrust the scheme and are not fully aware of what it is about. The Assistant Secretary has stated that 30,000 people have subscribed to the programme. Last weekend I talked to some farmers in Counties Carlow and Kilkenny who told me that a lot of participants drop out because the bureaucracy and amount of paperwork involved does not make it worth their while.
One farmer who contacted me told me that he has built up his herd and now breeds purebred bulls and heifers. He also told me that even though he got the top price when he sold a bull last year the animal would not get a three star rating now and may be granted just two stars. He has spent 20 years building up his herd to provide a finished cattle product up to factory standard, yet his bull will not receive a rating of three or four stars. Where does one go from there? I think the scheme will not work.
I ask the Minister and his Department officials present to look at my list of questions and consider these issues. Will the Minister and his Department postpone a mandatory Euro-star index system? I suggest that the system be implemented as a guideline for the next five years. If it is found to work, then we can make it mandatory in 2020, and thus protect the future of the beef farmer in this country.
I wish to ask about the 2014 reference year. A lot of young farmers in 2015 had no reference year and may not even have had a farm in 2014. Therefore, I suggest we give them a two-year chance. I ask for 2014 and 2015 to be made reference years, which would give them a chance to join the system. I suggest that each year be taken in its own right. In other words, I want a rolling system every year which is based on its own merit. For example, 2014 would be the reference year for 2015, and the same would apply for each year up to 2019.
As part of the roll-out of the beef data and genomics programme, I want the rate of 60% replacement reduced to 40% by 2020. The new system should not be pitched as high as 60% but reduced to 40% in order to give people a chance to participate and remain in the scheme.
I want to know the following. How many farmers have applied to join the scheme? What will happen to the moneys if they are not fully utilised? It was mentioned that there are 30,000 applicants and the scheme should be fully subscribed. If the scheme is not fully taken up, where will the leftover money go? The matter is of concern to farmers.
I understand that Dovea Genetics has only one Charolais bull that has a five-star rating. The company supplies half the country with straws for breeding purposes. With such a situation, how can we prevent inbreeding? Farmers participating in the programme will want to get a good-quality animal. If one buys a heifer in Wexford and a bull in Waterford, the purity of the breed might be in danger. Not having enough four- and five-star bulls available for breeding is a serious matter.
I understand that exported calves were not included in the genomics programme last year. I believe appropriate credit should be given for export animals and they should be acknowledged in the Euro-star index system. In other words, exported calves were not included, so their mothers did not benefit in terms of the index system. Why? They were excluded just because the calves were exported. If those animals had been sold to factories here their mothers and fathers would have received a rating. The omission of such exported animals is wrong.
Will the system be able to efficiently process cases? Will tests be omitted? Last year I was told that purebred herd owners had to wait six months to get the result of a genomics test, which prevented them from selling their animals. As many as 30,000 farmers have applied to join the system. Is it capable and efficient enough to cater for such a number?
I thank Mr. Gleeson for his presentation.
A few months ago I used the analogy of an apple high up in a tree to describe the programme, which means it will be hard to attain. As much as 70% of the suckler herd is located in the west of Ireland in a region that spans the country from County Clare all the way up to County Donegal.
People were frightened when they received a letter with red writing which referred to clawing back the money.
Why has the Department decided on an environmental scheme? Under the previous system the calf was weaned before it was sent to the mart and the farmer had to fulfil certain criteria before he was paid. I know one answer. In an era of world trade, one cannot subsidise production. This was not a subsidy but a means of ensuring that the animal for export would be in better condition and would not contract pneumonia.
I query the Department's figure of €30,000 because I can tell everybody that all the farmers who talk to me are pulling out of this scheme. The average size of a herd is 12 cows. The proposed scheme is not worth the hassle for producers.
I know Mr. Gleeson has stated that the cost of genotyping will be in line with what it cost last year, but we have heard the Minister say in the past month that the contract will go to tender and the price will come down to approximately €18. Previously it cost €30. Are Mr. Gleeson and the Minister on two different wavelengths or are they basing the reduction on the whole herd?
The ICBF has no statistics on all the calves that are exported to Italy and England. We are relying on farmers to feed good food to the animals they sell. If one sells animals that have not been fed well, it will come back when the animals are killed as the quality of the cow will not be good.
An issue that we will need to consider in the next three or four years is the general configuration of the animal. Not so long ago the heifers that a farmer brought to the mart could either be put in calf or killed for meat. Now we are going down a road whereby the heifers will be classified and those with one to three stars will be sent to the meat factory. We are walking into a situation in which we are putting the farmers into the hands of the meat factory once more. When the Scottish farmers came to buy animals, they judged the animal and bought black heifers. Some of them might not have been classified as four or five star animals, but they were good cattle. I think the way this scheme is put together will play into the hands of the dairy sector. I was at one of the meetings on the maternal scheme where a farmer who had Charolais bulls and cows was told straight out that he would probably have to change breeds. We are choosing to go for a narrow-arsed animal. We are deciding to go for the animals produced for the dairy sector, which will play into the hands of that sector.
There is a fear about entering a six-year cycle to produce a greener animal, an animal that will grow faster and die sooner. It is expected that everything will be hunky dory. What if the system does not work out in five years' time? I have warned that if the proposal does not work out the farmer could face a penalty. I invite Mr. Gleeson to put himself in the situation of a farmer who goes with this scheme and finds that after five years it has not worked out and then he is told that all the money he has received will be clawed back. Somebody from the unions would be jumping and hopping if this were to happen to officials, but the farmer gets kicked every time.
I know the bulls that come in from France or other European countries are just one star or two star animals. The EU is great for telling farmers right around Europe what to do, but there is no joined-up thinking on bulls bred in England, France or elsewhere to make sure that farmers have accurate information on the calibre of the animal. Farmers have judged cattle down through the years and can evaluate them based on their experience. There has been no consultation whatsoever with the ordinary farmer. The ICBF and the Department have come up with this rushed scheme. Everybody welcomes the money - nobody is saying that the money is not welcome - but the level of fear means that farmers will walk away from it. That is a very sad thing.
I welcome the briefing on the beef data and genomics programme, but this seems unusual, as the closing date has passed. We had a meeting on the scheme in Tuam three or four weeks ago. The officials should have been there in front of 700 farmers to go through the scheme with them. I know a number of people withdrew their application on the basis of what they heard. Now they want to go back in.
This is a relatively good news story. The suckler herd has been crying out for this for years. It is an environmental scheme, but the work involves the animals. It is a crossover scheme whereby the farmer is paid per hectare, based on the animals.
I know from talking to breeders that the price of pedigree bulls with four or five stars has increased in the past number of weeks and is now between €1,000 and €1,200 a head. There is no reliability whatsoever in respect of some of these animals. Is there a concern that the star rating will fall by the time we start to see the progeny in 20 to 24 months? A farmer could be buying trouble right now to make up the scheme. I know Mr. Gleeson says they must have it by 2018, but the farmers are doing it now already. There must be some concern within the Department that the animals that farmers are buying now will not be good in three years' time and the progeny will not be good in three or four years' time. I am not trying to be dramatic, but instead of using a good eye to look at animals before he buys them, a farmer might as well buy an animal from the newspaper based on it being a four star or five star animal. Are the marts able to provide the star rating of the animals that are being sold in the ring? Up to now the weight was the most important element.
I welcome the fact that money is being spent on the suckler herd. Let me give an example of the level of confusion about the scheme. A farmer in south Galway participated in the genotyping programme - I acknowledge that that scheme is different from the scheme we are discussing - but missed out on genotyping one cow and suffered a 100% penalty. Mr. Gleeson assures us that this scheme will be flexible, but there is not that level of trust on the ground. What Mr. Gleeson says and what we as members say is not good enough because the real experience of the past number of years does not bear it out. It is about building up that trust again.
There are still too many unanswered questions. Even though we say there is a lead time of two or three years, people want to know what the review will look at in three years' time. What can be changed? If I miss an action, what is the penalty for that one missed action? What number of penalties add up to a 100% penalty? There is nothing worse than having a system under which a problem found in the fifth year can result in a requirement for a farmer to return all moneys received for the first four years. That is no good for the suckler herd. The majority of farmers are trying to improve their stock and improve the cattle they have for export. They would welcome the money coming into the suckler herd, but is it worth taking the chance if they cannot work with the Department? I think the Department is behind the curve on this issue.
It is a bit ridiculous that this briefing session did not happen six weeks ago, but is happening after the deadline has passed.
People will always welcome a scheme that will improve profitability in the suckler herd, because most suckler beef farmers are losing money at present.
The aim of this scheme is to achieve in six years in the suckler beef industry what has taken 20 years in the dairy industry, with a much older cohort of farmers. Farmers who are less open to change now have to face far more challenges. I do not think this is feasible. We are trying to put a square peg into a round hole. I echo what Deputy Connaughton said in that the issue of trust is massive. Farmers have already been hit badly in respect of land eligibility clawbacks. That has left a bad taste in their mouths. We are tying farmers into a six-year scheme, a scheme under which the ICBF cannot guarantee the star rating of the cattle involved.
There have been significant inconsistencies in the past five years in respect of inspections by the Department. An as example, let us take land eligibility inspections, whereby one is twice as likely to get a financial penalty from an inspection in County Clare than in County Mayo. Surely there is not that big a difference in farming practices between Clare and Mayo, yet one is twice as likely to get a penalty in County Clare. There is a significant level of mistrust, and Mr. Gleeson has not allayed it. He has not made it his business to go around and explain to farmers in advance of the closing what was involved.
All of us, to one extent or another, have been very badly burned by the housing bubble.
The Department is creating a bubble in the breeding herd through the use of four- and five-star ratings, which inflate the price of stock. These inflated prices are built on quicksand. A four- or five-star bull may end up being a two or three star bull, and while the reverse is also the case, consideration has not been given to the fact that farmers will have to buy into this programme at inflated prices.
I calculate that a substantial amount of money, approximately €8.3 million, will be spent on genotyping alone. On what basis are the witnesses adamant that this programme will deliver for farmers, especially given that payments under the previous beef genomics scheme were late because the Department failed to release them before Christmas? Would the majority of farmers, namely, those with ten or 12 cattle, not be much better off putting another heifer in calf as opposed to tying themselves into this scheme for six years? What measures will be introduced to improve the entire herd? A great deal of learning is available on issues such as getting cattle in calf quicker and better use of grass. This learning should be used to benefit farmers inside and outside the scheme. What specific measures will be introduced in the next five years to achieve this objective for farmers who are inside and outside the scheme? That the majority of farmers with smaller suckler herds are not joining the scheme sends a clear message that the Department has failed to achieve its primary objective for this programme.
Unfortunately, I must vacate the Chair as I need to attend another appointment. Before I do so, I should inform members that representatives of the Irish Cattle Breeding Federation, ICBF, will appear before the joint committee on Thursday, 2 July 2015. Many of the issues raised in the 11 contributions from members relate to the proposed star rating.
Mr. Brendan Gleeson:
A large number of issues have been raised but I will try to deal with all of them. I accept that members' comments reflect what people are hearing on the ground. Having listened to what has been said in recent weeks, we are not blind to the issues.
Deputy Ó Cuív held up a booklet to demonstrate the complexity of the scheme, and I accept it is a complex, turgid and difficult-to-read document. To provide a little background, this is a rural development scheme which comes under the rural development programme. A number of members asked about the six-year period and the reason it is designated an agri-environment scheme. Previous schemes, including the beef data and genomic schemes in the previous two years and the suckler cow schemes, were national schemes and did not receive co-funding from the European Union. As EU co-funding is associated with the genomic programme, it must be slotted into an article within the rural development programme. In this instance, the relevant article is Article 28 of the rural development programme. Having explored all of the possibilities within the regulation, we found Article 28 was the only one into which we could slot the scheme. There are valid reasons for including it under Article 28, including that more economically and financially efficient animals are also more climate-efficient.
As to the reasons we are proceeding with the scheme, while I accept everything members have said about individual cases, it is clear that if the calving rate nationally is 80% and getting worse rather than better, one has an asset that is swallowing up profits and not delivering anything. This is a climate and profitability overhead, and it is important to do something about it.
Improving genetics is one of the principal vehicles for dealing with fertility, producing heifers that have more milk, and ensuring that weanlings are heavier at weaning time. Mr. Sean Coughlan of the ICBF is due to come before the joint committee in a couple of weeks. He knows more about this issue than I do and will be able to describe what genetics can deliver in terms of improved profitability and carbon efficiency.
On the six-year timescale for the programme, it is a statutory requirement under the rural development regulation that schemes approved under Article 28 are of six years' duration. The principle behind this is very good. As the Commission will explain, a one-year approach will not deliver the agri-environmental dividend the Commission wants agri-environment schemes to deliver. It wants measures introduced that will deliver improvements over a number of years. The more traditional agri-environment schemes include programmes with which members will be familiar, for example, the rural environment protection scheme, REPS, and the agri-environmental options scheme, AEOS. Furthermore, a farmer joining a scheme should know what he must do and how much will he be paid. This is a very sound principle and as with all sound principles, it implies difficulties. In this case, the difficulty is the commitment to actions over a six-year period during which a farmer's circumstances may change.
A number of clarifications have been issued on the nature of the six-year commitment. I will go through these and perhaps my colleagues will prompt me if I omit anything. The scheme allows for force majeure circumstances on a farm to be taken into consideration, for example, where a farmer becomes sick or loses land through no fault of his own. A variety of force majeurecircumstances are allowed under which a farmer may extract himself from the obligations without penalty. In addition, if a farmer decides for commercial reasons to lease or sell his land, he can extract himself from the scheme without penalty. If he retains enough land - in other words, the maximum payable area - to deliver his obligations under the scheme, he must do so.
The third area issue that arises is penalties. I understand precisely the reasons people are concerned about penalties and accept the comments made about the red print in the document that was circulated. In some ways, the expression, "damned if one does and damned if one does not", applies. People have to understand that they are entering a six-year scheme. On the other hand, the penalty regime in the scheme is complicated. A long list of penalties is included in the terms and conditions. However, the circumstances in which a clawback of funds can occur are rare and unusual and would require someone to disengage from the scheme. To the extent that penalties apply, they are graded in various ways. For example, if someone delivers between 80% and 100% of the data collection, a proportionate reduction will apply based on the percentage of the data submitted. If somebody delivers less than 80% of the data, no payment will issue for data collection for the year in which the breach occurs. On genotyping, if someone delivers between 90% and 100% of the genotyping, a reduction will apply to the genotyping element of the payment only, based on the percentage that has been genotyped. A penalty description is provided and the penalties are proportionate and reflect the minimum required under the regulatory requirements and approval of the Commission.
People fear that a breach of any condition of the scheme will result in a clawback of funds but that is not the case. It is important that applicants, of whom we have 30,000, engage with the Department and their Teagasc advisers and that we get this information to people as quickly as possible.
A question was asked about the level of genotyping. This is a costs incurred and income foregone scheme, as are all rural development programmes. For example, this approach also applies to the rural environment protection scheme. A framework has been built on costs incurred by the farmer. For example, if we were to reduce the 60% requirement, the minimum required would be that we reduce the payment by whatever is the cost of the genotyping and whatever overhead we have imputed for the effort involved in doing the work.
That is not something we would choose to do; we would have to do it. That is the way the payment is built up.
Mr. Brendan Gleeson:
Yes. There is another important point here. We have been through a complex and difficult negotiation with the Commission. This is a kind of leap for the Commission as it is an aid to a suckler scheme that involved getting approval from the Directorate General for Agriculture and Rural Development, the Directorate General for Climate Action and the Directorate General for the Environment, and persuading them that this scheme, which will improve the efficiency and profitability of the beef sector in Ireland, will also deliver benefits for the environment. We have just come through that process and have a scheme approved. To be perfectly frank, going back to the Commission with another negotiation that would have to go through inter-service consultation would put at risk the payments we want to make this year.
The Minister has already agreed that we will engage with farm bodies in the context of a mid-term review. The concerns that emerge as we run the programme will be taken into account. What is really important now is that we engage with individual applicants, that they talk to their Teagasc advisers and that they get clear information on the scheme. We will try and do that as much as we can.
People have a difficulty with the replacement strategy. All I can say on it is that this is something on which we engaged carefully with the Irish Cattle Breeding Federation, ICBF, and experts. We are assured there are enough animals in the system to address the issues on the replacement strategy. For example, 75% of herds already have a four- or five-star bull in the terminal or maternal index. We think there are enough replacement animals out there, based on the best information we have from people who know what they are talking about, and I have confidence that they know what they are talking about.
There was an issue about the reliability of the index. An index, by its nature, evolves over time. There is no doubt that the information we are gathering now will improve the quality and reliability of the index we have. I would expect those changes to be incremental. The scheme requires animals to be of four- or five-star standard at the date of genotyping or at the date of purchase. If there is a change in the star rating of an animal afterwards, it should not result in any penalties for the farmer.
Deputy Connaughton raised issues about communications with farmers and I accept there is a view that the Department might have attended Irish Farmers Association, IFA, meetings and so on. We have written and sent information sheets to 70,000 farmers, spoken to 8,000 farmers on the phone through our helpline and have put frequently asked questions up on our website. We will have training as part of the programme so that people involved with it will be taught how to use the indexes. It is important that people get information directly from the Department and from those who are running the scheme. In the next week or two, we will send a letter to people which will be quickly followed by information from the ICBF on the star ratings of the herds. At that point, people can make a decision.
Deputy Ó Cuív mentioned a case in which someone was told that if they did not withdraw from the scheme before they had the letter from the ICBF, they would be penalised. That is absolutely incorrect.
If I may correct Mr. Gleeson, what I said was that I understand ICBF will send him a pack with the equipment and all the rest of it. According to the farmer, who is not a constituent, he was told that once he got that pack, he would owe the money for it to the ICBF.
Mr. Brendan Gleeson:
That is not correct. I accept absolutely that somebody told him that but it is simply not correct. People will have up to the time of the payment or an inspection to determine whether they want to engage with the scheme. We want to allow people the maximum flexibility.
There was an issue about the profile of herds and applicants. I only have the figures in today but, looking at the 30,000, there is a broad spread of applicants from around the counties, predominantly in the west, and there is also a broad spread of herd sizes, from the very smallest to large herds.
Incorrect. From the Department's own data, 80% of farmers with fewer than ten cows have said "No". Based on the data I was given yesterday, only 8,677 herd owners with fewer than ten cows have applied for the scheme. I think Mr. Gleeson will find a huge rate of attrition among those. I told all the farmers in Connemara to apply because we were hoping to have a bit of common sense about this, yet if the rules change, they will find they are out. There are 39,605 farmers in that group, so the number of farmers with ten cows or fewer who have applied equates to 22%. In the next group up it is 53%. It then goes in around 70% for the remainder and does not vary that much. The biggest cohort of farmers, amounting to 55% or 73,000, have ten or fewer suckler cows. Only 22% applied, so in other words, virtually 80% of those farmers said, "Sorry, no thank you." It is a massive number of farmers. It might not count at the Department because they do not count for an awful lot of cows, but these people are trying to live.
Mr. Gleeson says he has 80% calving. Did it strike him that, as Teagasc points out all the time, when he takes out the single farm payment, the disadvantaged areas scheme payment, the areas of natural constraint payment and so on, there is no profit in the farming of suckler cows? More calving is probably a zero-sum game in terms of increased profitability. Farmers are cute; why would they break their necks buying more feedstuff and increasing their calving rate if there is no profitability? If Mr. Gleeson can get more profit for the farmer, he will find that the farmer will suddenly get his calving rate up. Farmers will do things that can bring profit. All these artificial methods of trying to boost production are only doing what they did in New Zealand; they are making the factories richer and doing nothing for farm incomes.
Mr. Brendan Gleeson:
We have 30,000 applicants. I accept that Deputy Ó Cuív has a different set of figures there. I am only telling him what I have today and cannot account for what he has in front of him. Among the 30,000 applicants, on the basis of the information I have today, we have a broad spectrum of herd sizes and counties, while 60% of the 30,000 applications have herd sizes less than or equal to 20 cows.
Sorry, but the answer to that is that there are lies, damned lies and statistics. Approximately 78% of herd owners have fewer than 20 cows. Does Mr. Gleeson see? I got the figures yesterday evening from Mr. Pat Preston in Mr. Gleeson's own Department. I am telling him that the herd size is tiny. Therefore, when he says 60% of applicants have fewer than 20 cows, that is inevitable. Based on the figures I was given yesterday, 22% of farmers with ten cows or fewer have applied for this scheme. They represent 55% of the herd owners in that group. Seventy-eight percent of herd owners have fewer than 20 cows. Obviously, if there are any applicants at all, the vast majority of them will have to be in that cohort.
Mr. Brendan Gleeson:
I am just trying to present a set of facts here. I am not trying to make a point. I am simply saying that we have just under 30,000 applicants and there is a spectrum of herd sizes and county applicants represented, which is broadly similar to the beef genomics scheme last year and the beef data scheme. Of those applicants, 60% have a herd size that is less than or equal to 20 cows.
I accept that 30,000 applicants is not the entire population of suckler farmers and, therefore, the proportion of the entire suckler population is different. I am simply presenting a set of facts here.
I have the same data. The Department received about 28,000 applications, so it is about 60%. That is a fact. In simple terms, the situation becomes much more acute at ten and under. In case people think these are all in the hills of the west of Ireland, from Donegal to Kerry, they can forget it. These small herds are spread throughout the country. We do not have 40,000 herds in the west of Ireland. Therefore, the fact still remains, as Deputy McNamara said, that this scheme is totally unattractive to small herdowners and is geared towards the guy with the big automatic computerised operation for all the data keeping. That claim is borne out by the figures.
I will make the following prediction. I went on radio and encouraged farmers who had between three and nine cows to apply because we hoped the Department would adopt a common-sense approach. Unfortunately, I must now explain to those farmers that the Department will not budge an inch and that farmers will have to weigh advantages against risks before participating in the scheme. With or without me, when the packs arrive the Department will find there is a massive attrition rate among small herdowners. I do not know if any of my colleagues on the committee, who deal with farmers at marts around the country, agree with me. I believe the Department will find that of the 8,600 farmers, or 20% of applicants, 50% of them could easily vamoose.
The scheme reminds me of the Grand National. Let us say 28 horses line up and that they represent 28,000 applicants. The pack comes out at the first jump and the scene is like Beecher's Brook on a bad day where all the runners tumble down. The participants will go over all the jumps over the six years but at the end of the scheme, we will be lucky to wind up with 20,000 farmers finishing and the Department will claw it all back from the rest.
I wish to raise an issue about replacement heifers. If one has cows and one bulls them with five-star bulls from this year on - as we all know, the ICBF changes its data three or four times a year - by the time a heifer comes to calving, she could have between nine and 12 judgments on her, so her rating could be reduced to two or three stars. How does the Department intend to address the problem?
I asked a similar question earlier. How can a participant be certain, when it comes to having the 50%, that the replacement cows and bull are four or five stars? As Deputy Fitzmaurice pointed out, one could start off with a four- or five-star bull but end up with a two-star bull, notwithstanding one's best efforts. How can one be certain about star ratings? How does a new entrant into beef farming join the scheme?
Mr. Gleeson admitted that the scheme is experimental and yet under no circumstances will he or the Minister accept an amendment to simplify the scheme. There is concern about the matter. As has been said by Deputy Ó Cuív, if the Department does not make some changes to the scheme, then an awful lot of people will drop out. It will not be worthwhile participating in the scheme unless one is a big farmer with between 50 and 80 cows. A small farmer with ten cows will receive only €60 or €65 each or €650 a year, so it will not be worthwhile for him or her to participate. The scheme will not benefit small farmers who are the very people we are trying to keep in beef production. There must be some changes that we can made to make the scheme more attractive.
Testing is another factor. What will happen when one runs out of animals after conducting tests for four and five years? Where will one find animals to test? According to the terms of the scheme, one must buy another ten animals just to conduct a test, but farmers cannot afford such a practice. I am a beef farmer and I rear calves right up until they become beef cattle. Therefore, I know that farmers cannot afford to buy new animals. If a farmer does not have the money, where will he or she get animals to fill the quota stipulated by the Department? I cannot fill the quota so I must buy an animal or animals and prices will increase as a result. The beef market will go haywire because I and others will have to bid against other buyers.
It would have been better if producers, particularly small suckler farmers, had been consulted before the Department went to Brussels, thus avoiding this situation. I want an answer to the following. If one buys a bull with a two-star rating, and one is a good judge of an animal, yet the bull turns out to be a four- or five-star animal down the road, is one complying with the rules of the scheme? Is it the case that an animal will not be in compliance with the scheme if it has been purchased as a two-star bull? If that is the case, then the scheme will take good stockmen out of the sector altogether.
Mr. Brendan Gleeson:
I will outline the requirement. On 30 June 2019, one must have at least one stock bull that has been genotyped at four or five stars on a holding. If a bull is genotyped at four or five stars then he is genotyped at four or five stars.
Let me answer the question about payments. This is not an income support scheme. We are trying to do something that we believe to be in the best interests of the herd and of farmers generally. It is not in the interests of large or small farmers to carry animals that are deficient, and I think everybody would accept my view. The average payment for a herd of 20 cows would be €1,750. We expect the cost of genotyping to be around €350. I say this to put some perspective on costs, because there is a misunderstanding about the matter.
On the question of genotyping, part of the reason for the 60% testing requirement is that there will be more four- and five-star animals available. The concerns people have about the availability of four- and five-star animals would be exacerbated if we had a smaller testing requirement. Such a percentage will help to make more of these animals available.
In terms of spreading the benefits to the herd generally, even if there is testing of the core 30,000 herds, better animals will be produced which will filter down through the system. All of that would benefit everybody in the sector, not just participating herds.
On the question about genotyping in terms of the availability of four- and five-star heifers, we understand there will not be any difficulty with the availability of four- and five-star heifers. We understand that there are enough four- and five-star heifers in the system and the number will increase as the scheme goes on. The Minister has said that we will engage with farm bodies. We will engage, through the scheme, on its operation and we will see how it is working. There will be a mid-term review. Under the rural development programme there would be such a review anyway. We will examine any of the difficulties that emerge in the operation of the scheme and build this into any mid-term review.
It is not the case that there is an unwillingness to move. The difficulty is that the scheme has been approved by the Commission on the basis of a regulatory framework which has a certain rigidity in it, to the extent that we cannot move. For example, the six-year requirement is stipulated by the legislation.
I ask the assistant secretary to answer my question. The ICBF will judge a bull on 12 tests. One will start off in good faith with one's animal and then one will get a calf. What happens if the rating changes, following 12 different tests, by the time the heifer has had her calf? Where does the Department stand on that issue? Does one have to buy a five-star animal? I expect a "Yes" or "No" answer.
Mr. Brendan Gleeson:
As I understand it, there is an average replacement rate of 16% for female animals. Some people have the idea that they can start with a certain kind of animal and end up in the same place by 2020, but that would not happen anyway. There will be a replacement of females in beef herds between now and 2020. The best information we have from the ICBF is that there will be enough four- and five-star animals in the system to meet the requirements of the scheme.
The assistant secretary has not addressed my question, so I will repeat it. Let us say one starts the scheme in good faith with a five-star bull, and the ICBF carries out 12 assessments.
If someone ends up with a two-star or three-star animal after starting off with a five-star animal, do they have to get rid of it the next year or the year after, if they do not have 50%, in order to make sure they have 50%?
Is Mr. Gleeson saying that if a farmer buys a four-star bull now and in six years' time the bull is a two-star bull, the fact that the farmer bought him as a four-star animal is sufficient to satisfy the criteria? It does not matter that the animal is now down to two stars?
That is new information, because we were told he could be downgraded to a two-star or one-star bull during the term. So is Mr. Gleeson saying that if he is a four-star or five-star bull from the very beginning, he stays that way?
What can the Department do to be certain? Mr. Gleeson has explained about the bulls. A farmer buys a four-star bull and he remains eligible if he is still in the farmer's herd in six years' time. Is it the same with heifers?
Mr. Brendan Gleeson:
We have said we will look at it on a case-by-case basis. If people had particular difficulties in 2014 and they say on a justifiable basis that 2015 would be a better base year for them, we will look at that. It is difficult to be prescriptive about precisely what those circumstances are. Our objective is not to punish people. We cannot encourage or incentivise people to increase herd size through the scheme. People are perfectly entitled to increase herd size in accordance with the market in the normal way. That will not affect their eligibility for the scheme. Their payments will not increase but they are perfectly entitled to react to the market.
There seems to be a lot of concern on the really marginal lands in the west where many people put cows out on commonages and very poor grazing land. The Department's star rating will give one the equivalent of a lowland sheep, but when it comes to viability in the harsher conditions of parts of Leitrim, Donegal, Sligo, Mayo and Kerry, it will not suit the GAEC.
Many farmers produce their own replacement animals instead of going on the market and buying them. Will it be a big challenge for them to get their replacements up to four or five stars without going on the market? If they go on the market, will they get something that they think suits their particular land?
Since AI is out of the question on an offshore island like Inishbofin, will each farmer, irrespective of herd size, be required to own four- or five-star stock?
Mr. Brendan Gleeson:
In respect of marginal land, perhaps the Deputy should tease this out with the ICBF and Sean Coughlan. As far as I am aware, the opposite is the case and four and five stars will produce lighter and more robust and efficient animals that are better suited to marginal land. I do not think it is the case that one is talking about breeding a lowland sheep. It is the case that one is breeding a more robust cow that calves at a younger age, calves more easily, requires less inputs and has more milk for the calf. These things will ultimately save farmers expenditure on feed and vets at calving and improve their overall profitability. They are characteristics that are equally suited to farmers in the west and on marginal land.
I must confess that the situation pertaining to the islands had not occurred to me. The requirements of the scheme are that a farmer must use AI involving a five-star bull or they can rent or lease in a bull, as people do, subject to the normal animal health considerations. A farmer can rent an animal in the same way as they always did.
Let us get real. Will the Department go back and look at the situation on the islands? I was talking to a farmer yesterday who was farming on an island but the island happened to be in the Shannon. He had the exact same problem so Mr. Gleeson should not think that this is just a problem in the west. In five years when the guy gets penalised, it is no good saying page 15 of the rules says that the Department cannot help him. Can the Department sort that out now?
My point relates to four- and five-star animals, particularly on the maternal side. The Department needs to get more information out because people think that a four- or five-star animal is a U or E-grade animal. It is not. The Department must get the information out that it is not just on confirmation but is about milk production and things like that. A Kerry cow could have a four- or five-star rating because it has the maternal instincts for more milk. The Department must get that information out there. We see how a four- or five-star bull is about confirmation of production but it is totally different on the maternal side. People are working under a misapprehension about the four- or five-star rating on the maternal side.
Mr. Brendan Gleeson:
There are people in this room who are probably better experts on genetics than I am, and some of them are around this table while others might be in the Public Gallery. The maternal index includes terminal traits. It is not a simple thing. We are trying to produce beef but we are trying to produce it off cows that are robust and efficient and calve easily, so that is the delicate balance that the four- and five-star rating tries to achieve. If one looks at the bull side, it is four or five stars on either of the terminal or maternal index so this is not driving things one way. It is just trying to produce a more efficient cow that improves profitability and efficiency. It is not a one-way street.
In respect of the question about the export of calves and cattle that are not being taken into consideration with regard to credits, can this be looked at now because of this new scheme? They were not considered under last year's scheme and they need to be considered because many calves are being exported. If they are not getting credits before they leave the country, the farmers who produce them are missing out.
I apologise for not being here earlier. Before we wrap up, I have two questions. There was not much discussion since I arrived about the stocking density. Is the stocking density of 1.5 very rigid?
The suckler farmer would be very uneasy or unhappy compared with the dairy farmer who would regard the stocking density as a serious advantage. A stocking density of 1.5 calved cows per hectare will prevent a number of farmers from qualifying. It may eliminate some of the bigger farmers. These are the farmers who may be more progressive and they will feel a little left out in this regard. What is the position on this issue?
What will the position be in the event of the doomsday scenario of a low take-up under the scheme, resulting in a pool of money left over as we move towards the back end of 2018, 2019 or 2020, for example?
Mr. Brendan Gleeson:
On the question on stocking density, nobody will be excluded from the scheme based on his or her stocking density. We are saying a stocking density of 1.5 animals per hectare is used to calculate the maximum number of hectares that will attract payment. In other words, what we will do is divide the number of calved cows in 2014 by 1.5 to come up with a maximum payable area. That does not mean that somebody cannot have a higher stocking density than 1.5 calved cows per hectare, but he or she will be paid only on the qualifying number of hectares. Some 50% of suckler farmers have a stocking density of 0.5 or lower. Some 90% have a stocking density of one or lower, while 98% have a stocking density below 1.5. The 2% who do not have a stocking density lower than 1.5 can still apply under the scheme.
With regard to the calculations I have been given for the number of cattle involved, there seems to be a saving of €5 million per year already. That gives a figure of €30 million. If farmers drop out, that sum will increase, but the converse could also be true. If Mr. Gleeson is correct and the scheme is the greatest thing since the sliced pan and will make farmers massively profitable, will the Department open a new tranche of the scheme next year and the following year for six years, covering the periods to 2021 and 2022, because the rules would allow this to be done?
That concludes what has been a very interesting and important discussion. Representatives of the ICBF will be here in a couple of weeks on 2 July for a follow-up discussion when we will have many more questions for delegates. I thank Mr. Gleeson and his colleagues for attending to answer questions in a very forthright way.